Correlation Between PM Capital and Close Loop

Can any of the company-specific risk be diversified away by investing in both PM Capital and Close Loop at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PM Capital and Close Loop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PM Capital Global and Close The Loop, you can compare the effects of market volatilities on PM Capital and Close Loop and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PM Capital with a short position of Close Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and Close Loop.

Diversification Opportunities for PM Capital and Close Loop

-0.75

Correlation Coefficient

PM Capital  Close Loop

Pay attention - limited upside

The 3 months correlation between PGF and Close is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Close The Loop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Close The Loop and PM Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PM Capital Global are associated (or correlated) with Close Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Close The Loop has no effect on the direction of PM Capital i.e., PM Capital and Close Loop go up and down completely randomly.

Pair Corralation between PM Capital and Close Loop

Assuming the 90 days trading horizon PM Capital is expected to generate 3.5 times less return on investment than Close Loop. But when comparing it to its historical volatility, PM Capital Global is 2.75 times less risky than Close Loop. It trades about 0.07 of its potential returns per unit of risk. Close The Loop is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Close The Loop on October 22, 2024 and sell it today you would earn a total of  1.00  from holding Close The Loop or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PM Capital Global  vs.  Close The Loop

PM Capital Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PM Capital Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, PM Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Close The Loop

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Close The Loop are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Close Loop unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PM Capital and Close Loop

The main advantage of trading using opposite PM Capital and Close Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PM Capital position performs unexpectedly, Close Loop can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Close Loop will offset losses from the drop in Close Loop's long position.

The idea behind PM Capital Global and Close The Loop pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.